Risk Parity Under the Microscope

Posted by Daniel J. Loewy (pictured) and Brian T. Brugman of AllianceBernstein (NYSE: AB) After tremendous growth over more than a decade of strong returns, risk-parity strategies have recently been struggling. Has the market run-up exposed a fatal flaw? We don’t think so.

read more

Reaching for Yield: Worth the Risk?

Investors seeking more robust returns in a lower-interest-rate environment often look to high-yield bonds for answers. But it’s critical that they don’t reach too far down the credit spectrum in search of higher yields—as tempting as it may be.

read more

Bond History: Rhyming, Not Repeating

When the Fed does eventually start raising interest rates, at AllianceBernstein we don’t expect to see bonds experiencing the dire scenarios of 1981 or 1994. Instead, the 2003–2006 period of slow and measured rate normalization seems more likely. But it’s not a perfect match, and we do see some important investment factors to consider.

read more

High Yield: The Perfect Storm That Wasn’t

In a year when the US Federal Reserve caused jitters over quantitative easing, the US government endured a shutdown and investors shifted focus to equities, it’s no surprise that pure “duration-sensitive” bonds like US Treasuries had negative returns as interest rates spiked. But high yield emerged relatively unscathed, returning over 7% for the year.

read more

Building a Better Passive Mousetrap

Ashwin Alankar (pictured), Michael DePalma and Richard Abramson In a recent blog, Passive Management Does Not Equal Passive Investing, we showed how passively managed portfolios actually create an active investment in which volatility isn’t benign and risk exposures can vary wildly over time. So if we could fix the problem and reduce exposure to spikes [...]

read more

The Marriage of QDIAs and Managed Volatility in US DC Plans

Probably the best way to connect US defined contribution (DC) plan participants with the angst-reducing benefits of managing volatility is through a plan’s qualified default investment alternative (QDIA)—especially if the QDIA is a target-date fund.

read more

Dig Deep—Then Dig Some More—to Uncover Risks in EM Corporate Debt

Emerging-market (EM) corporate debt returned big numbers for investors in recent years, as the sector rode a general wave of optimism about the future. But those days are gone. In 2013, successful investors have had to take a more painstaking path.

read more

Passive Management ≠ Passive Investing

Ashwin Alankar (pictured), Michael DePalma and Guoan Du Passive investments are often misunderstood. Instead of providing static positioning as implied by the label, they can be very capricious because of market and sector turbulence. To tame a passive asset, we think investors need to exert more active control over the dynamics of volatility.

read more

Reality – Expectations = Happiness

Many US investors may be disappointed when they open their account statements.  Despite the widespread news that the Dow Jones Industrial Average gained 21% in the  first 10 months of 2013, most US investors’ taxable portfolio returns were far lower—typically somewhere between 5% and16% range.

read more

Risk Management: An Ounce of Prevention

Seth J. Masters (pictured), Daniel J. Loewy and Martin Atkin They say an ounce of prevention is worth a pound of cure. But if the sickness is excessive portfolio volatility, “prevention” can entail more than one step.

read more

Archives by Month:

Archives by Subject: